Do wealth shocks affect the health of elderly in developed countries? I exploit the booms and busts in the US stock market as a natural experiment that generated considerable gains and losses in the wealth of stock-holding retirees. Using data from the 1998–2011 Health and Retirement Study I construct wealth shocks as the interaction of stock holdings with stock market changes. These wealth shocks predict wealth changes and strongly affect health outcomes. A 10% wealth loss leads to an impairment of 2–3% of a standard deviation in physical health, mental health and survival rates.
"Wealth Shocks and Health Outcomes: Evidence from Stock Market Fluctuations."
American Economic Journal: Applied Economics,
Household Saving; Personal Finance
Portfolio Choice; Investment Decisions
Information and Market Efficiency; Event Studies; Insider Trading
Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination